Las Vegas-based Allegiant Travel Co. rode record first-quarter highs in average fares and air-related ancillary charges to record its 45th straight profitable quarter, the company announced Wednesday.
The parent company of Allegiant Air reported net income of $34.1 million, or $1.86 a share, in the company’s first quarter ended March 31, up from net income of $31.9 million, or $1.65 per share, a year earlier.
Double-digit percentage increases in average fares and ancillary revenue — the fees and charges Allegiant passengers pay for things like seat selection and baggage fees — resulted in a 10.8 percent increase in operating revenue.
The air-related charges offset a slight decline in third-party ancillary revenue from things like hotel room sales. Allegiant signed a new prepurchase room agreement for Las Vegas hotel rooms late in the fourth quarter with market rates that weren’t as favorable to the company. The airline did not disclose the identity of the company or details of the agreement.
“We went from a very favorable agreement to no agreement to now an agreement that is better than no agreement but not as favorable as the prior one we had,” Allegiant Travel President Andrew Levy told analysts on a conference call.
While Allegiant is based in Las Vegas, most of its growth in the past year has occurred on the East Coast, where the company has scheduled flights to four Florida destinations. The company’s previously announced plans to develop a seasonal base in Myrtle Beach, S.C., will be implemented next month. Twelve new routes, most of them in the East, begin in May.
In the first quarter, the average fare for an Allegiant flight was $146.51 — $99.52 for the airfare, $41.79 in fees and $5.20 in third-party transactions.
Allegiant carried 2 million passengers in the quarter, a 10.9 percent increase over the first quarter of 2013, and planes were 88.5 percent full with paying customers, a decline of 1.3 percentage points from the first quarter of 2013.
Levy said Allegiant ended the quarter with 10 Airbus jets on its routes and the airline is looking to add nine more by the end of 2015 to improve the airline’s overall fuel efficiency.
But Allegiant may have some higher costs on the horizon.
The company told analysts it expects costs per available seat mile to climb with fuel prices expected to rise 2 percent to 3 percent and nonfuel costs by 5 percent to 7 percent.
The jet fleet is entering a cycle of heavy maintenance checks and the company also is expecting increases in salaries and wages.
On the labor front, Levy said the company recently had its first contract negotiations with dispatchers and will have mediation sessions with pilots next week and mediation with flight attendants next month.